We're trying to get a handle on where the figures are coming from--why some
doctors are prescribing most expensive drugs and some aren't; who they are; is
it the nature of the patient population they're taking care of, or is it
because of their prescribing habits? |
So the hospital organization has worked very hard in developing a formula to
look at the patient population, and weight them in terms of risk. Some doctors
may have patients who are older and sicker. Some may have very young, healthy
patients. Some may have more women in them. Some may have fewer women.
All of these affect the way tests are ordered and prescriptions are written.
So you have to have a way to look across the board at everybody, and weight
everybody's performance in a manner that's equal. The reports that we're
getting now are reports that look at as many factors as they can fit into this
formula, and try to equate that with what they call "the efficiency index,"
which is a way of comparing physicians, one to another.
How do the numbers change behavior?
When somebody who heads your organization gives you reports that say you're
either doing well or you're not doing well against the benchmark, there's the
implication that that person believes you're either doing well or not doing
well. Most of us respond to that cue, and recognize it as a sign that we've
got to change.
Or we can get angry, but that isn't very effective. Most of us are wise enough
to know that it's not effective. If a colleague does it, we can have a long
discussion about it, but that might not change behavior as urgently as the
director of the group saying, "Look, these are your numbers. Look them over,
and we'll talk about them later."
Do you see behavior changing after a meeting like that?
Behavior changes in subtle ways every time you look at the data, because we're
all motivated to be the best. Everybody wants to get an A. Everybody wants to
be the number one, to have good numbers when they're presented to the group.
I'm sure behavior changes.
What are you trying to get the members in your pod to look at?
There are several key areas of utilization that have the greatest impact on our
financial picture. One is pharmacy. That's the single largest one. That's
across the board, not just in our group, but nationwide. Pharmacy costs are so
high that they've actually exceeded our inpatient hospital costs. So we're
looking at that very carefully.
We're looking at the length of stay, at how long we keep people in the
hospital, whether we keep them in longer or shorter than the benchmark, whether
it's appropriate for the diagnosis. We're looking at the number of tests that
are ordered, whether they're x-ray tests or other kinds of ancillary tests.
Some tests need to be ordered more, for example, mammography. Theoretically,
mammography utilization should be 100%. If you look at most studies, most
people are down around 70% or 60%. Some of that is because patients don't go,
and some of it is because we just don't do it. Our group just happens to be
over 90%. We've done very well.
The last group is out-of-network referrals. That's patients who are referred
out of the provider group, which is a very costly part of our thing. Those are
the four major elements that we look at when we look at how we're doing in
terms of utilization.
I know there are other issues involved, but it feels as though again and
again you're coming back to money being the bottom line. This is about
Yes. Of course it's about money. Somebody's got to pay the bills. There's
tremendous financial tension. The amount of money being lost is really
mammoth. The amount of debt that we incur with some of these managed care
plans is running now into the millions of dollars. So we know that we're
really in a hole, and the numbers are shown to us on a regular basis. Every
month, we see how deep in the red we are.
We get a fixed amount of money to pay for patient care, and then we get a
certain amount that's added back in at the end of each quarter if we remain
under budget. Since we've had a static number of patients coming in over a
number of years, we haven't been growing that group.
Since they've started coming in, the patients are getting older and older.
When they first came in, their cost was very low. It was very profitable. We
had a lot of money left at the end. There was enough to pay all of our bills,
and still maintain a reasonable income from it.
But now as the patients are getting older, they're requiring more care, and
we're not meeting our budget any more. We're actually spending more for their
care than we're getting paid by a capitated plan like Secure Horizons. If we
continue this pattern, by the end of this year we'll owe hundreds of thousands
of dollars back to Secure Horizons, and that's just from our group of nine
physicians. We'll owe hundreds of thousands of dollars back to the insurance
company if we can't be more effective in delivering care.
People think of doctors making a pretty good living. What's the dollar and
cents implication of what you just said? Will people who are making $150,000
or $200,000 a year now be making $50,000 less? Will people who are making
$100,000 a year be making $20,000 less? If that happens for the eight
or nine doctors that are sitting around the room, what is the implication of
the statement you just made?
If you extrapolated this and it continued in that pattern--which won't happen,
because we'll find some way to balance things out--but if we were to continue
to lose money like that, doctors won't do this work for $50,000 a year.
What will happen is the practices will close. People will go out of business.
If you look at the other hospitals here in the city, one of the major other
provider groups in the city has dumped the senior globally capitated plans,
because they were losing so much money with them, they felt it would drag the
institution down. So instead of trying to find some way to accommodate the
elderly patients they were caring for, they just said, "We're won't do it
anymore," and they just dumped all the patients.
Too many sick people?
Too many sick people.
You sound like a man wearing two hats. One is the financial hat that
says, "Hey, we've got to cut the cost of care," and the other hat is . . . What
is this like for you, as a doctor?
It's terrible. The worst experiences I've had in my professional career have
been within the past few years dealing with patients on issues of managed care
where we're trying to control costs. The only time I've been in arguments with
patients and really had very, very verbal arguments with patients about where
they should be going for their care has been surrounding the issue of managed
It's really been heartbreaking. I try to avoid it as much as I can, because
really the only part of medicine that's unpleasant right now is just dealing
with this issue--fighting with people about why they can't go to see whoever
they want, why they can't go to whatever hospital they want, why they can't
have whatever drug they want.
What they don't understand is that we're enforcing these things so that we
don't lose more money, because we're losing so much as it is. This is income
that we're entitled to because we've earned it, and it's being held back from
us by the insurance company. If we allow patients to break all these rules and
make special exceptions left and right, then we're actually subsidizing their
right to do that with money out of our pockets. I didn't go into medicine to
pay for other people's care.
I don't mind giving free care. What I do mind is giving care to people that
I'm supposed to be getting paid for that they think I'm getting paid for, when
not only am I not getting paid for it, but I'm subsidizing their care to go
somewhere else. I just can't do that.
Has your income level actually been going down in recent years?
Until this past year when I joined the group that I'm in, I was actually in
private practice. Over the four years before I joined this group, my income
dropped every single year by a minimum of 6% and a maximum of 15%. So over a
period of about four years, I saw my income drop over 35%. It was just going
down every year, and it would have gone down more this year were I still in
private practice, because of the way the contract was negotiated this year.
I'm not crying. I'm making very good income. I don't feel that bad about it,
and I'm still doing the work I'm doing, but it's not like we're making more and
more every year. We're getting pretty well hammered out there.
When you look at the general working of the pod, how long has the pod been
I think the system's been set up for about eight or ten months, maybe a
What's the best thing the pod has done? If you had to cite the upside of
the pod, what do you think it's been able to do well?
We've developed uniformity in the way we deal with a number of medical
problems. Everybody has different ways of dealing with different issues. By
discussing what is the best care for various problems while considering costs,
I think many of us have come to a more uniform way of dealing with a problem.
It doesn't mean we've narrowed our options, or are not being creative, or
aren't thinking more openly. But some of us might not have been up-to-date in
the way we manage things.
That has really revolutionized the way we're treating asthma patients now, and
we're doing a better job. They're healthier because of it. That's an
effective example of what we've been able to do.
What are the biggest problems?
What's holding us back primarily is the cost of pharmacy. That's the biggest
problem. The second biggest problem is the difficulty of keeping people from
going to physicians outside of the provider group. Boston is a medically
sophisticated city. There isn't a hospital in Boston that's the best. Every
hospital in Boston is outstanding, as far as I'm concerned. There are great
doctors everywhere, and patients know that. They want to be able to get the
person that they think is the best. It's very hard to convince patients to
stay within the system.
So why should they stay within the system?
Because that's the way their insurance plan is written.
No, their insurance plan lets them go, doesn't it?
No. It only lets them go if we allow them to go. That's the catch. If they
call the insurance company and say, "I want to go to a certain physician that
happens to be out of my provider group, but he's a member of your insurance
plan," they'll say, "Well, if your primary care physician says it's okay, then
it's okay with us."
Why don't you okay it?
The insurance company doesn't care because they don't pay for it--I do. . . .
If the patient goes outside of your provider group, that whole amount goes to
the other physician.
I get into that argument with patients, and discussions about where they should
go for their care, because I know that, at the end of the month, I'll get my
report from my pod. If we're not performing well, it'll be because if every
doctor in my group allowed somebody to do that once a month, we'd be in the
toilet with our budget. We just can't do that.
What do the patients say?
One woman said, "You're not letting me do this because of money." My response
to that, usually is, "Of course. What do you think it is? If it was just
medical care, I'd let you go wherever you want. But this is a contract, and
I'm not in the business of subsidizing your care. I'm not here to pay for your
medical care. The way the insurance company has structured this, if you go
outside of our provider group, I and my colleagues in my pod subsidize your
care at the other institution, because you're taking the money that's being
withheld from us to pay for your care."
And that's not what we're there for. We're there to take care of you. If we
can't take care of you, if we can't give you the care that you need, then it's
reasonable to go elsewhere. Quite honestly, every single week this comes up,
sometimes, every single day.
How do you feel about that as a doctor?
I hate it. It's the worst thing I'm doing now. I try not to think about it.
If I can get through the day without having to do that once, it's a great
Do you see your colleagues struggling with the same kind of issue?
Some people struggle with it. Some people don't yet understand the impact of
it. There are people in the organization who continue to allow patients to do
whatever they want. That hurts them and it hurts all the rest of us. We're
trying to get them to understand that. If it means we're going to lose
patients to other institutions, then that's what it means.
Do you think it was a mistake to try to take on this risk? It sounds as
though what's driving you is this withheld money, this risk money. Is that a
smart policy? Is that a smart strategy for doctors?
I don't think it's a good strategy for doctors to be involved in the financial
aspect of care at all, except to understand what the costs are in an effort to
keep the costs down. Once we are put at risk, you can't deny that it will
affect the way you make decisions. I don't care how much you fool yourself.
At some level, it has to affect the way you make decisions. We should be
making decisions solely based on what's best for the patient.
Do you think that your colleagues understood this when they reached to take
some of this risk back from the health plans?
The way it was originally presented to us it looked a lot better. It looked as
though there was a lot of money to be made. There were plans involved in
globally capitated contracts around the country that were raking in millions of
dollars because of the way they were managing their care, and because they had
new, young, healthy patients coming into it.
Also when the plans were first set up the federal government was pouring larger
amount of money into the Medicare capitated risk programs. . . . Medicare
takes its Medicare money and disburses a fixed amount, based on where you are
in the country for the care of that patient to the insurance carrier.
So the insurance carrier would get this block of money, keep their amount, and
then spread it out. Initially Medicare was pouring too much money into it.
There were groups all over the country making millions and millions of dollars.
It looked very attractive. So everybody jumped into it. It seemed a great way
to make up for some of the other deficits that we had.
Then what happened?
Well, then Medicare cut down on the amount, because they realized they were
overpaying. The patients started getting sicker, medical care costs went up,
and all of a sudden that great big fat balloon disappeared.
You say you have ethical discussions.
Ethical discussions about whether it's reasonable to tell a patient that they
can't go to their oncologist outside of our provider network that they went to
for their malignancy, who they've been seeing for the past five years. We've
had to do that a lot--tell patients you've got to stay in the system.
So what you're saying really is that choice, which a lot of patients want
and what a lot of health plans are selling, is a killer for doctors and
How do you lick that? Choice is the hottest word in the medical market at
It goes back to a theme that I bring back to patients often, which comes from a
song by the Rolling Stones: "You can't always get what you want, but if you try
sometime, you might find you'll get what you need."
The system now is set up to give people what they need, not what they want.
What they need is good medical care from good doctors who are concerned about
their care, and it's taking away what they want, which is choice.
How has the whole context changed in terms of the economic climate and the
sense of competitiveness? How has that affected the practice of
When I went into practice 21 years ago, I had the advantage of being a native
of the town, having trained in the town, having gone to medical school here. I
knew most of the hospitals in the city. If I had a patient who had a medical
problem, I would chose the physician who I thought was the best person to take
care of that--not the institution--but the physician, whether they were at the
New England Medical Center, the Mass. General, the Deaconess, the Beth Israel,
the Brigham. It didn't really matter.
That changed dramatically in the past seven or eight years, as the managed care
contracts forced us progressively to try and stay within the system. In the
past two to three years, it's become severely restrictive. Now I no longer can
utilize care across the city, and the people who work at the other hospitals
can also not do the same.
If somebody at the Brigham wanted to use a gastroenterologist at the Beth
Israel or the Deaconess, they couldn't do it, because it would negatively
impact their budget, and they would end up losing money on it. The truth is
there are good doctors all over the cities, so you can justify keeping people
within the system for that reason. But what you're doing is removing
The other thing that's happened as a result is that the cross-fertilization
that occurred between institutions has stopped. We no longer have physicians
who work at both institutions, and patients who are cared for across the board.
The collegiality and sharing of information is all gone.
We've gone from the mecca of medicine to a medical Beirut, and it's really a
tragedy. I think it's really destroyed medical care here.
You went from a system where you could pick any doctor in any institution
anywhere, and now you've got to stay within the team. Can you honestly say
that doesn't affect the quality of care, at least in a few cases?
I'm sure it affects the quality of care. I'm certain it affects the quality of
Absolutely. First of all, there's duplication of services. We're spending
money unnecessarily to do things that we could do at different institutions if
we cooperated more. We have more specialists in each hospital because we have
to substitute care there that we might be doing at another hospital.
How about from the perspective of the individual patient?
From the perspective of the patient, they may not be getting necessarily the
best care. Absolutely.
Because you have to play this team loyalty?
Because you've got to stay within the team. Absolutely. It's not just in our
institution. It's in every provider group in the city. It's restricted.
What's your reaction to that? Good system? Bad system?
I think it stinks. I've spoken out about it many times. I think there are
ways to fix it, but you need leaders who have the courage to do that.
So you lose money this quarter, and maybe more in the next quarter. At the
end of the year, what does that mean?
Well, it means that if we continue to lose money beyond what's coming in, we
actually have to give money back to the insurance company.
You write them a check?
We write them a check. We, physicians write checks that go back
to the insurance company.
And it comes out of your back pocket?
Out of our pocket. We don't have any reserves.
How do people in your pod, in your group, feel about that right now?
Well, they're anxious and they're upset, because their income is directly
impacted. They're going to lose money. Not only will their income drop, but
we will individually have to actually pay the money back.
Can you afford to keep going on like this? Are people talking about
dropping this bunch of patients?
We can't afford to keep doing that indefinitely like that because, obviously,
we have to be able to make enough money to run our practices, too. This can
become quite costly.
Can the hospital afford it?
Can they afford it? No. Nobody can afford it. The hospitals can't afford it.
The patients can't afford it. Nobody can afford it. That's the problem.
Nobody can afford any of this.
So what's going to happen to all these elderly, sick people?
Either the government's going to step in and pay for it, or care is going to be
difficult for them to find and they won't be able to get care. It makes it
very uncomfortable when a patient calls and asks for something that I don't
really think that they particularly need, but I don't think that it would make
that much of a difference, and they really want it, and I have to say, no
You have to say no for financial reasons?
I have to say no purely for financial reasons. Or they want to go outside of
our system because they've heard of a doctor who they think is better. If I
allow them to do that, then I'm going to have another situation like this where
not only are we not getting paid, but we're subsidizing the care. The way it
works out, there's a fixed amount of money, and we have to use that money to
pay for the patient's total care. If we use up that money paying for services,
then there's nothing left to pay us. It's gone. We pay for all of the care of
the patient, whatever services they receive, and when that money's gone, that's
all there is.
And you wind up going in the hole?
We wind up by going in the hole. The hospital has to go into the hole.
Everybody goes into the hole.
Is this a pattern throughout this program for seniors that you're talking
Well, here's an example, a patient I have in the hospital right now. She's a
Secure Horizons patient who I brought into the hospital last Friday, a very ill
woman, who we had hoped to have in and out of the hospital to treat a specific
problem in two days. It's now seven days later at $1,200 a day. We haven't
solved her problem.
I expect she's going to be in a lot longer. I've already lost money on this
patient. Anything I do for this patient now is money that is going to be
subtracted from us. It's not money that we're not going to get paid. We're
actually going to have to pay it back. So this has become a very costly Secure
Is there a ceiling?
There's a ceiling because we get a fixed amount of money from the insurance
company to provide all the care for this patient. This is a globally capitated
patient, which means that all of the services that the patient requires come
out of the budget of dollars that we receive. Once those dollars are used up,
then we start dipping into the pool of the rest of the money that's in there.
Now we've got so many elderly, very sick patients, that that pool is vanishing,
and there's no money left.
Now you've got a hospital that's in the red. What are the choices? What
can you do about that?
In the moral real world, we really don't have a choice. We have to provide the
care, but we can't go on doing that forever for everybody. . . . The hospital
wouldn't be able to pay their bills.
I think it's hard for a lot of people, Doctor, for people to feel sorry for
doctors and money.
And you know why. What are doctors making in your pod? If you have to pay
the insurance company, how big of a chunk is going to come out of their
The average internist in this country now is earning about $110,000 a year.
That's about what our people are earning, plus or minus, depending on the
amount of time they're putting in. If they have to write a check back to the
insurance company for $5,000 or $10,000, or if their income is dropped by
$5,000 or $10,000 because of losing care, and that continues each year, there
comes a point to which the doctor will say, "I'm not real comfortable working
ten hours a day, taking calls all night long, doing all this work, and not be
able to pay my bills."
In fact, somebody said that to me in a staff meeting just last week. I can't
pay my bills. Now, sure, these are people who are earning a lot of money, more
than most people in the country. But they also have a standard of living that
they spend up to what they live. So if they start having less money . . . it's
a lot easier to spend more than it is to cut back.
And yet you're being told to run health care like a business.
Well, health care is not a business, as you can see. You're dealing with people
whose lives are destroyed and shattered, and you can't turn your back on them.
You just can't. We wouldn't want anybody to do it to us.
How do we get out of this bind?
Well, clearly, it's a very conflicting situation. That's why, when you asked
before how I felt about this managed care thing, I feel terrible about it. I'm
very conflicted in providing the care that I know the patient needs and yet, I
know that I'm losing money when I see this patient, and if I have more patients
like this, as I do, then I'm losing more and more money. There comes a point
at which I can no longer afford to do it, because I can't do anything.
One of the things that we see in the new medicine is a tremendous focus on
data, performance data, and report cards. What do you get, as a pod leader,
from the higher-ups?
We actually sit down and talk about exactly how many tests we're ordering. If
some patient of mine goes to a physician other than me and gets a prescription
drug that is not part of our formulary, that comes back to me in a report. I'm
the one who's penalized for that, and I get that report in detail, and I know
who wrote the prescription, too. That's how detailed the data is.
Here's another report that breaks down costs based on utilization for all the
different categories of services provided. So, for example, office visits,
inpatient visits, psychiatric visits, home visits, inpatient and outpatient
surgery, tests, medications, radiology, emergency room, are all broken down by
cost--interestingly, by cost per unit. You notice this is the insurance
company term-- not cost per patient, but cost per unit.
They're not people anymore.
No, they're units. And then it breaks down as to what these are costing us per
member, per month, against what was budgeted for that care. Let's take office
visits. You can see that I was budgeted $18.49 for this period per member, per
month, for office visits. $11.81 per member, per month was spent, so my
variance against what was expected was actually negative.
Fewer visits than were budgeted. So we sort of made money on that. But let's
look at therapies. These are treatments that people are receiving of a
complicated nature. . . . You see that I was budgeted $1.59 per member, per
month, and I spent $2.63 per member, per month, and that's the way they look at
it. I spent it. The patients received the care wherever it was given, but it
was coming out of my budget. So I was in negative balance for $1.04 per
member, per month. That's a 66 percent override, and that reflects back on me.
And so I have to say, "What are these therapies that we're giving?"
Can you be that statistical and that abstract about something as
unpredictable as medical care?
I can't. I just deliver the best care I can and hope we do it right, and try
and be conscious of all these factors. But you just can't think about it all
the time. You can't worry whether the care that you're giving is going to
throw these figures off. But, unfortunately, what they're telling us is that
we do have to worry about it.
So every time I write a prescription, every time I order a test, every time I
send a patient to the emergency room or refer them to another doctor, this is
somewhere in the back of my mind. How is that going to look on the figures
next month? Even if I don't want it to, I know that next month I'm going to
sit down with the other doctors in the group and we're going to look at these
When you're looking at this stuff, what's going through your head when
you're treating a patient?
Well, let's talk about a patient here in the office, for example, somebody who
came in today with respiratory illness. It wasn't clear whether it was just a
simple respiratory illness or something more complicated, and my reaction based
on this particular patient was that I was concerned that the patient actually
had a pneumonia.
My natural reaction would be to order a chest x-ray and possibly a blood count,
and wait and see. Now, as I'm about the write that down, I'm saying to myself,
now, how is this going to impact my x-ray utilization this month? I'm ordering
another x-ray. I suppose I could just treat the patient and not do the x-ray,
but then I'm going to be uncomfortable that I'm really not doing the best job I
Some people today would argue that you shouldn't do the x-ray, just treat the
patient. And you can tell them that you think it's pneumonia, but maybe it's
not. So I sent the patient for a chest x-ray, they came back and had
pneumonia, and I treated them. And then I had to pick a drug. I could use our
standard formulary drug.
As I'm sitting there writing on the paper, I have to ask the patient, what are
you allergic to, and this patient was allergic to the formulary drug. So I
prescribed the standard drug we use to treat pneumonia in this patient. But I
could've chosen a different drug which would have been much more costly. Part
of the reason that I didn't choose that drug was because it was more costly,
not just to the patient, but to our pod. Now, they're both equivalent. I
could've used either one. As I give the patient that drug, the said to me,
"Well, what about this other medication?" because their friend had pneumonia
and got the other medication.
And I said, "No, this drug is just fine. It will do the job well." They said
they heard that this was a new, really terrific drug that would be much better.
The truth is that it wasn't really much better, and it probably wasn't the best
drug for this setting, but one could argue for that and the patient was asking
When I said no at that point, it was no longer just because I was giving them
the right drug. It was also because if I acquiesced to their request and gave
them the drug that they wanted, it would've cost me a lot of money.
Do patients understand the motivations that are driving you?
No, I don't think so. They're suspicious of it. They say to you, "Is this a
financial decision? Is this because it costs too much? Is it because my
insurance plan won't let you?" And I say to them, "No, it's because this is
the right drug." It also turns out that this is a less expensive drug.
Do you always level with patients, or do you sometimes . . .
No. If they ask me, I'll level with them most of the time. I'm sure there are
probably times that I don't, but I can't think of any offhand. There are some
times when you have to stretch things a little bit, where people are really
asking for something that's just off the wall.
You need to reinforce that this is the right thing to do, and make them
understand that you're not jeopardizing their health because of the constraints
of their insurance plan. Before we talked today, I was on the phone with a
patient who we had to switch from Zocor to Lipitor. These are very equivalent
drugs. These are cholesterol-lowering drugs. But Lipitor is a lot less
expensive. It's at least as effective as Zocor, and a lot less expensive. The
reason he was switched was not because it was better drug, but it was because
it was less expensive, and he wanted to know why we were doing it.
So I told him, and he got very angry. I told him, "It's the same thing. It
will do the same thing for you." He was angry that a decision was made about
his care based on the cost of the treatment. I understand his point of view,
but the truth of the matter is that there is not an unlimited supply of dollars
to pay for this care.
And I said to him, "This is the right medicine for you. It's a good medicine.
It will do a terrific job, and this is the one that I want you to have." He
wasn't happy about it, but he'll take the medication.
inside the dilemma ·
financial incentives ·
cost v. care
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producer's notebook ·
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